In a recent Reddit Ask Me Anything (AMA) session, Cameron and Tyler Winklevoss, the identical twin founders of crypto exchange Gemini, maintained their optimistic stance on bitcoin.
In one exchange, Tyler Winklevoss claimed that bitcoin’s market capitalization would surpass gold:
“Our thesis around bitcoin’s upside remains unchanged. We believe bitcoin is better at being gold than gold. If we’re right, then over time the market cap of bitcoin will surpass the ~7trillion dollar market cap of gold.”
Bitcoin’s market cap is currently at $71 billion, a far cry from gold’s $7 trillion.
“Crypto Needs Rules”
The Reddit AMA comes a week after Gemini launched a controversial new marketing campaign. Gemini posters erected near Wall Street in New York declared that “crypto needs rules.”
Further adverts in the New York Times claimed “the revolution needs rules” and promoted “crypto without chaos.”
Rules like mathematics? Sure. Crypto needs that. Rules like "KYC AML licencing taxation Patriot Act bitlicense bullshit?" No. Crypto doesn't need that. pic.twitter.com/8azzqCKlwa
It’s a controversial position among many in the cryptocurrency community who resent the presence of regulators in the space.
Since the launch of the Gemini exchange, the Winklevoss twins have operated within strict regulations and licenses. As Chris Roan, head of marketing at Gemini told the Wall Street Journal, “We believe that investors coming into cryptocurrency deserve the exact same protections as investors in more traditional markets.”
Committed to Bitcoin ETF
In the Reddit AMA, the Winklevoss twins also doubled down on their goal to launch a bitcoin exchange-traded fund (ETF). Cameron Winklevoss said, “We are committed as ever to making an ETF a reality!”
He also outlined some of the Securities and Exchange Commission’s concerns and how Gemini would work to satisfy them. This includes the addition of a Nasdaq-style market surveillance system.
Mining pool, Etherchain, has reported that Ethereum Classic (ETC) has succumbed to a successful 51% attack “with multiple 100+ block reorganization.”
A 51% attack occurs when a malicious actor commands more than half the hashing power on a blockchain. It allows the attackers to “double spend” a cryptocurrency, hence why it’s often known as a “double spend attack.”
“Block reorganization” as mentioned in Etherchain’s tweet, refers to a blockchain which excludes blocks that were initially thought to be part of the longest chain. This is consistent with a double spend attack.
We can confirm that there was a successful 51% attack on the Ethereum Classic (#ETC) network with multiple 100+ block reorganization. We recommend all services to closely monitored the chain and significantly increase required confirmations.
There’s no other way to say it: 2018 was a true rollercoaster for the blockchain world.
While it started with a historic surge to an unbelievable crypto market capitalization of $900 billion at its peak, the market disastrously retraced by nearly 90% since those glory days.
Despite countless financial analysts and crypto experts predicting heights of up to $60,000 per bitcoin in 2018, the year, unfortunately, turned out to be one of the worst for the crypto market.
However, now it’s time to focus on the future. In order to effectively prepare yourself for the following year, you definitely want to take a look at the following sectors of the blockchain world.
1. Bitcoin Exchange-Traded Funds (ETFs)
Date to Watch: 27th of February, 2019 – VanEck and Solid X Bitcoin ETF Decision Date
Bitcoin ETFs have undoubtedly been one of the hottest topics during the past 12 months, especially since they are regarded as a potential catalyst for rapid price increases of bitcoin and other cryptocurrencies.
One ETF application, in particular, has been declared as a possible game-changer. The collaboration between investment firm VanEck, the blockchain company SolidX and the Chicago Board Options Exchange (CBOE). It is one of the few physical ETF proposals that is actually seen as promising by several financial experts.
If a trading vehicle of this kind was approved, the ETF issuer would need to actually buy real bitcoins from an exchange or, more likely, the over the counter (OTC). A potential ETF of this size requires tens of thousands of bitcoins, and the ensemble would need to acquire them, which could lead to a rapid increase in price.
Furthermore, an ETF would enable investors and traders to eventually trade bitcoin on a traditional stock exchange, which would also help the digital currency to gain popularity and availability.
Unfortunately, the US Securities and Exchange Commission (SEC) has not yet decided on the ETF submitted by VanEck and SolidX. The final decision has been postponed several times, however, the SEC announced an ultimatum on December 7, 2018. The Commission chose the 27th of February, 2019, as the day for either the approval or disapproval of the proposal.
Although dozens of established cryptocurrency specialists, like CNBC expert Bill Barhydt, believe that we will see an ETF approval in the following months, it remains to be seen if the SEC is convinced that the time is right to unleash the first physical Exchange-Traded Fund for Bitcoin.
“Security tokens, not utility coins, will attract significant amounts of Wall Street money next year.”
Security tokens or tokenized securities were definitely buzzwords that grew in the past 12 months in crypto. This is, of course, because tokenized assets are one of the most promising innovations in the blockchain sector, as they could disrupt the corporate and financial world.
Rohit Kulkarni, the managing director of SharesPost, one of the leading marketplaces for private securities, firmly believes that 2019 is going to be the year of tokenized securities. In a recent article on Nasdaq, Kulkarni stated that “security tokens, not utility coins, will attract significant amounts of Wall Street money next year.”
Despite missing regulations often being seen as a major stumbling block for the industry to grow, Kulkarni is confident that the space will mature in the near future. “We ultimately expect a more stable regulatory environment over the next six to twelve months,” he said.
In 2018, many companies already started engaging in the security token industry. Overstock, for example, became the first billion dollar company to start building their very own security token exchange, which is expected to open up trading during this year.
Moreover, Open Finance became the first U.S. based security token exchange that went live on December 13, 2018. With traditional stock exchanges, such as Switzerland’s and Malta’s main stock exchanges, forming partnerships to build security token exchanges, the industry is without a doubt worth to keep an eye on in 2019.
3. Nasdaq and New York Stock Exchange Get Involved in Crypto
Date to Watch: Late January – The expected launch of Bakkt.
The two biggest stock exchanges in the world will step into the crypto ring in 2019: the New York Stock Exchange and the Nasdaq.
Bakkt, a cryptocurrency exchange built by ICE, which is the parent company of the NYSE, planned to launch the first physical-backed bitcoin futures on January 24. Although the start has already been postponed several times, crypto enthusiasts still see the exchange as a potential game-changer for involving institutional investors into the market, due to the reputation and experience that is connected with its operator.
Meanwhile, Nasdaq is following Bakkt on its mission and recently announced it was working on Bitcoin future trading for 2019 as well. Further news from Nasdaq include the exploration of security tokens and a potential exchange for such assets in the following time.
While it is not yet certain what kind of future security token trading Nasdaq will be providing, it still shows that some of the biggest financial enterprises in the world are not scared of the overall bearish market sentiment of 2018. “The concept of having a digital currency that does allow for transfer of money across borders, that really transcends the banking system, and allows for a seamless transfer, is really really fascinating and one that we have to assume will become a part of the ecosystem of the internet,” Nasdaq CEO Adena Friedman commented on digital currencies such as bitcoin.
Fidelity: We’ll “make digitally native assets, such as bitcoin, more accessible to investors”
$1 billion in cryptocurrency was stolen in 2018 with high-profile crypto exchange hacks hitting the headlines. Keeping cryptocurrency on an exchange is risky. And, while holding bitcoin yourself in a personal wallet is safe, you risk losing the wallet.
That’s why custody and storage solutions will be a huge talking point in 2019.
As for institutional investors, bitcoin or storage solutions are seen as major hurdles for attracting the big fish to the crypto market. Most institutional investors are prohibited from investing in assets unless they are held in secure custody provided by highly specialized firms,
Coinbase and other blockchain companies already gave birth to novel crypto asset custodial solutions in 2018. Fidelity, an established asset management firm that administers its clients’ assets with a combined worth of about $7 trillion, also decided to “make digitally native assets, such as bitcoin, more accessible to investors,” and founded a new subsidiary that focuses on storing digital assets for its clients. According to CNBC, the company is already in the process of onboarding clients and is expected to launch its platform in early 2019.
Some say that we should even expect major banks to join Fidelity and Co. in providing services for storing bitcoin and other cryptocurrencies. As stated in several reports, Ripple CEO Brad Garlinghouse, at the Singapore FinTech festival in 2018, mentioned that banking institutions are about to offer blockchain asset custody solutions to their clients during the next year.
5. Over-the-Counter (OTC) Trading
The Circle Trade OTC desk
Circle reported $24 billion in OTC crypto trading last year
OTC or over-the-counter trading is another keyword that pops up here and there when scanning the blockchain related stories of 2018. OTC trading is the private buying and selling of cryptocurrencies, often in huge amounts, off the major exchanges.
Bitcoin OTC coverage has increased in the media and social networks, but the trading activity itself seems to have increased in 2018 as well.
With Goldman Sachs-backed Circle’s OTC trading platform recording $24 billion in OTC trading last year, it is regarded as a true money-making machine. “We have seen triple-digit growth enrolling in our OTC business. That’s a big growth area,” mentioned Jeremy Allaire, the CEO of Circle, in an interview with Bloomberg in October.
Consequently, some of the biggest cryptocurrency exchanges are now working on their own OTC trading desks or, in regard to Coinbase, quietly launched one in the matter of a few months.
Binance, on the other hand, decided to act in a different way, as its newly founded investment wing Binance Labs recently invested $3 million into a U.S. based OTC desk called Koi Trading.
With major exchanges moving into the OTC business, the field is likely to play a key role in the blockchain world during 2019.
Creating a “seamless experience for storing and managing digital assets”
Banking institutions around the globe are already experimenting with blockchain technology in order to improve cross-border trading and daily operations. In 2018, several achievements were made and they might give us an outlook of how the following 12 months could look like for banks.
The first real customer transactions between several big international banking institutions were conducted on the blockchain platform We.Trade on July 3, 2018. This event is considered a major milestone for blockchain adoption, as institutions across all industries were previously not interested in leaving their sandbox test environments.
While established banks are continuously pushing forward adoption of distributed ledger technologies, new players are also eyeing the creation of banks that are focused on blockchain assets.
Smaller offshore destinations in the Caribbean, e.g. Bermuda, recently announced an update of their banking legislation in favor of blockchain technology and assets. Additionally, a young enterprise called EQIBank, founded by previous bankers from HSBC, UBS and Credit Suisse, just opened their first customer accounts in December 2018.
EQIBank aims to provide a seamless experience for storing and managing both traditional and digital assets, as stated in a recent press release. This can definitely be considered as an upcoming trend since crypto startups around the world are currently applying for banking licenses in their countries.
7. The Cryptocurrency Insurance Industry
“The evolution is dramatic”
Insurance giants, such as MetLife and Allianz, are often regarded as notable blockchain researchers and adopters. Fair enough, considering that transparent ledgers and smart contracts seem to be the perfect enhancements for the daily business of an insurance company. The most promising use-cases include, but are not limited to, automating payments once the terms of a claim are met, increasing the transparency of transactions, storing information and enabling blockchain powered IoT processes.
Ryan Rugg, the global head of insurance at R3, believes the current evolution of insurance companies is a huge leap for the industry. “These developments would be innovative in any sector, but when you consider the processes underpinning the insurance industry have remained largely unchanged for hundreds of years, the evolution is even more dramatic,” Rugg explained in an article on BlockTribune. When talking about the future, Rugg further stated that “2019 will undoubtedly see the insurance industry enter the next stage of its digital transformation.”
“We need appropriate regulations to be put in place and enforced to safeguard the interest of investors”
2018 has definitely seen some considerable developments in terms of global blockchain regulations. With Malta officially becoming a blockchain island, smaller jurisdictions opening up to security tokens and the SEC finally cracking down on a majority of all the controversial ICOs, the blockchain space clearly advanced and is on its way towards becoming a matured industry. Still, there are countless regulatory issues left that hamper the global adoption of blockchain technology and services.
With 2018 as a foundation, we most probably will see exponential progress in the following year in the most important jurisdictions, such as the US and the EU. In fact, there are already several signs that validate this assumption. On October 18, the SEC announced the launch of a new FinHub, where regulatory approaches to novel financial technologies, like blockchain, are researched and evaluated.
After Singapore, Malaysia is another Asian country that wants to introduce new legislation for blockchain in the following year. “While some parties might still be skeptical of this space, there can be no doubt that we need appropriate regulations to be put in place and enforced to safeguard the interest of investors,” said Lim Guan Eng, Finance Minister of Malaysia. In Liechtenstein, the government is currently working on the Liechtenstein Blockchain Act, which should pave the way for institutional investors in 2019.
Further countries that are expected to unveil updated laws for blockchain include the United Arabian Emirates, Israel, Russia, Thailand and seven major states within the EU. The ball is finally rolling and global regulations in various areas of distributed ledger technology seem to be closer than ever before. We definitely have an exciting year ahead of us and might even be looking towards one of the most productive years for the blockchain industry ever.
Ledger, the world’s most popular crypto hardware wallet provider, has unveiled its next-generation product: Nano X.
The Nano X is an upgrade from the Nano S which sold over a million devices and featured in our best cryptocurrency wallets of 2018 roundup. The Nano X offers a host of new, improved features for safe bitcoin storage.
Here’s everything we know so far.
Ledger Nano X: Bluetooth Enabled
Ledger’s new hardware wallet will feature Bluetooth connectivity, allowing users to connect to a mobile device. The previous Nano S only connected to a laptop or desktop via USB.
It improves usability in a mobile-first world and it means the Nano X can be used on the go.
Ledger Live Mobile: A New Mobile App
Ledger will launch a mobile app to integrate with the device, Ledger Mobile Live. The app will enable users to make transactions and check their balance quickly.
In the past, Ledger users could only conduct transactions on the desktop software.
The app will be available on Google Play and Apple App Store on January 28th.
The Ledger Nano X features a larger screen than its predecessor. That’s a crucial upgrade as most of Ledger’s security features operate right there on the screen (PIN code access and transaction confirmations, for example).
The larger screen makes this process easier and more user-friendly. The buttons have also been moved from the top of the device to the front for a more intuitive experience.
However, the big problem with the Nano S is the inability to hold more than about ten cryptocurrencies at once on the device.
The Nano X aims to address that by increasing the memory.
Increased Memory: 100 Coins At One Time
By increasing the memory on the Ledger Nano X, users can hold significantly more cryptocurrencies at once.
That’s because Ledger stores each different crypto asset on its own wallet, using a separate app. It’s a security feature. If you want to hold bitcoin on a Ledger device, you’re not just storing bitcoin, you’re using memory to store a bitcoin wallet. If you then add ethereum, you also store an ethereum wallet or app.
The Nano X drastically increases the memory, meaning you can hold up to 100 different crypto assets at once.
The introduction of Bluetooth might send alarm bells ringing for some. A wireless connection does increase the risk of an attacker hijacking the connection.
However, Ledger claims it is still highly secure due to Bluetooth’s short range and the device’s built-in security features. Speaking to Bitcoin Magazine, CEO Eric Larchevêque said:
“The Bluetooth connection is only used to send public data, such as your public key. The transaction itself is encrypted end-to-end while using the highest level of encryption and security on the Bluetooth protocol … no private keys are on the Bluetooth connection. It’s the same as the USB cable. Security-wise, the architecture is the same.”
The private keys are stored in a microchip that remains in the device at all times. Additionally, all the most important security checks (like PIN access) take place on the device or in the app. The device itself will only respond to the corresponding user app which should limit attacker access.
The Nano X will launch at $119 including shipping. Its predecessor, the Nano S, will get a price cut.
The Ledger Nano X is available to pre-order now and will ship in March. The app will launch on January 28th.
Size: 72mm x 18.6mm x 11.75mm
Compatibility: 64-bit desktop computer (Windows 8+, macOS 10.8+, Linux) or smartphone (iOS 9+ or Android 5+)
For $21,000, you can now buy a fraction of a student residence building, The Hub, in South Carolina. In exchange for your investment, you’ll receive a digital token that represents your share of the building’s ownership fund.
It’s part of a joint effort from Convexity Properties, a Chicago-based real estate investment firm and Harbor, the all-in-one tokenization platform.
This tokenization of real estate opens up the market to investors that might not be able to afford a full property or even the high minimums of traditional real estate investment trusts (REITs).
In 2018, an asset management company, Elevated Returns, sold tokenized shares in a luxury hotel in Aspen, Colorado. Investors received “Aspen coins” to denote their partial ownership in the project. The crowdfunding campaign, via Indiegogo, started on the 8th of August 2018 and ended on October the 1st, 2018, raising $18 million.
However, only accredited U.S. investors were allowed to participate in the sale with a minimum investment of $10,000. “Accredited investors” are individuals with “earned income that exceeded $200,000 in each of the prior two years” or has a net worth of over $1 million.
These experimental projects point to a possible new future in real estate investment and blockchain technology. But how close are we to the realization of tokenized real estate? Block Explorer dives deeper into the various projects in their space, tracks their progress, and outlines the opportunities available.
Why Put Real Estate on the Blockchain?
The real estate industry experiences some massive problems.
It could reach $5.2 billion in 2018, which is significantly higher than $1.3 billion poured into the field in 2014. And blockchain technologies are named amongst the 13 real estate industry disruptors.
And it’s not surprising. Distributed ledger technologies can potentially patch a lot of holes in the industry. Firstly, it could help create a fully-transparent real estate registry. Secondly, it can create buying opportunities for financially-limited investors, through fractional ownership.
The Biggest Real Estate Blockchain Projects Right Now
Numerous blockchain startups have flocked to the space, promising easy access to real estate investment to anyone curious to get in. And not only to accredited investors. Among the most noticeable are:
Atlant offers Ethereum-based peer-to-peer rentals and tokenized real estate ownership. However, even though the prototype has existed since September 2017, and the public beta of the product was launched in October 2018, there’s still a lot of work to do. The company is still struggling to acquire all the necessary licenses and there’s not much clarity on the timeframe.
Blockimmo is striving to facilitate “an accessible, streamlined real-estate market” through tokenized real estate shares. Their recent big news is the company’s business model approval by the Swiss Financial Market Supervisory Authority (FINMA). It also launched a testnet with two property listings samples.
Real properties supposedly will be available on the platform in 2019. It’s all sounds very promising. Yet, when digging more in-depth to the current company’s website, it appears to be clear that the team has a long way to go.
Some worrying discrepancies can be found in the “frequently asked question” section. It claims that “submitted real estate properties are carefully curated by our team of experts”, but the current number of employees is four, and three of them are developers. So, those are probably not a great fit when it comes to real estate evaluation. But let’s give it some time.
jointer.io is another startup in the field. With an attractive motto “using blockchain & AI to democratize commercial real estate,” they want to go one step further and offer tokenized real estate not as a form of investment in one property but as an index, combining several properties.
Sounds great, but so far the website itself doesn’t articulate much about the progress and it hasn’t launched yet. A popup announcement saying “50 investors viewed this offer” when someone is trying to check out what the company has to offer is also quite sketchy.
Meridio also promises to “democratize real estate,” boasting lower investment minimums, reduced transaction costs, and increased liquidity. It invites you to “browse the properties,” but to do so you have to register on the platform. We’ve requested the access, though at the moment of writing there was no feedback from the team (see below). And the project’s progress, judging by its corporate blog, hasn’t been very obvious recently.
Brickblock is one of the earliest players in the tokenized real estate field and seems like they are on the right track with legal, partnerships and overall progress. It’s yet not clear if the project truly meant to expose any investor to the possibilities of owning a fraction of a real estate. While writing this piece we tried to register on the platform and there were some roadblocks on the way (despite the claims that it will only take 15 minutes to register).
The link to verification application didn’t arrive via text message as promised, the verification code to launch the identity confirmation chat wasn’t working (screenshot below). But overall it feels like an excellent start with an actual perspective of getting somewhere.
What’s Next For Tokenized Real Estate?
Even though the true “democratization” of real estate and the ease of investing in tokenized assets might solve a lot of problems, there’s a long way to go in many regards.
Especially due to numerous regulatory issues related to tokenizing real estate, notably if we are talking about the global availability of such assets.
For now, it will be difficult to usurp the traditional securitized real estate investment trusts (REITs). Realty Income Corp., offers Retail Stores REIT investment and currently trades at around $62 per share with monthly dividends of about 0,3% – 0,4%. Simon Property Group also pays out quarterly dividends of 1%-1,3% and the price of approximately $164 per share at the moment of writing.
I can purchase it with a couple of clicks using the mobile application of my bank with no legal complications and even my taxes are paid automatically from the profits received.
There’s no doubt that tokenized assets are the future and it might be much more convenient and even possibly more profitable to the holders. However, there’s still a long way ahead for it. So let’s hope that an infinite number of passionate brainiacs invading the space will have enough energy and determination to figure it out. I keep my fingers crossed.
And what do you think of tokenized real estate investment? How long will it take us to get there? Go ahead and share your thoughts in the comment section below.